Market Place; London Bullish On Thatcher

IN what market experts viewed as a ringing endorsement of Prime Minister Margaret Thatcher's policies and her prospective re-election, prices on the London Stock Exchange soared to record levels yesterday. The exchange's key 100-stock index rose 36.8 points, to 2,163.3.

This followed Friday's record one-day advance of 48.6 points. In four weeks, the index has gained 200 points. Since the end of 1975, it is up 50 percent.

''Thatcherism has worked in reigniting an entrepreneurial spirit in Britain,'' Nicholas Bratt, president of the $830 million Scudder International Fund, said admiringly.

This represents a dramatic turnabout, according to Mr. Bratt, who recalled that, in the not-too-distant past, expatriate Englishmen were jaundiced over prospects for their homeland. The Scudder executive left his native Britain 12 years ago for the greener pastures of the United States.

''Improved political expectations - namely, that the Tories will win - are a key factor in the market's steadily improved behavior,'' Henry B. W. de Vismes, president of the $105 million Transatlantic Growth Fund, said in London.

The centerpiece of Mrs. Thatcher's effort to refashion Britain into a land of ''people's capitalism'' is the privatization program, whereby shares of vast state-owned enterprises are sold to investors. The first offering, in 1984, was British Telecommunications, a giant utility.

In trading on the New York Stock Exchange yesterday, American depository receipts of British Telecom sold at a record 52 5/8, closing at 51 1/2, up 1 3/4. This issue has doubled in the last 52 weeks.

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''British Telecom serves as a barometer of institutional sentiment on the political front,'' Richard Gray, an assistant vice president at the international division of UBS Securities, said in New York. His firm is a unit of the Union Bank of Switzerland. Some prescient money managers began snapping up British equities last January. ''The Labor Party seemed to be in disarray, and this suggested that a Tory victory, whenever a general election was called, would be good for the market,'' Mr. Bratt of Scudder said. ''We increased our holdings of British stocks to 17 percent of the portfolio - up from 8.8 percent at the close of 1986.''

Major holdings include the Burton Group, a department store chain; Booker, a food company; Rio Tinto-Zinc, a mining company; Mount Charlotte, a hotel chain, and I.C.I., the chemical giant.

Operating out of Transatlantic's base in London, Mr. de Vismes also stepped up his purchases of British equities in January. And, like Mr. Bratt, he reduced holdings of Japanese securities to generate funds to buy these stocks.

''In fundamental economic terms, Britain is more attractive than any other country in Europe,'' Mr. de Vismes said. ''It enjoys 3 percent real growth, rising industrial production, buoyant retail sales and moderate inflation. For 1987, we are assuming 18 percent growth in earnings per share, dividends rising by at least that much and a stock market - cheap when compared to the rest of the world - selling at 14 times earnings.''

Major holdings of Transatlantic range from Allied-Lyons, a food-and-beverage company, to General Accident, a property-casualty concern, along with BPB Industries, a construction materials producer, and Hillsdown, a food processor. The portfolio also includes Burton and I.C.I.

The British market rose 27.8 percent in local currency terms this year through last Friday, according to Morgan Stanley Capital International Perspective in Geneva, compared with 20.6 percent in the United States and 41 percent in Japan.

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A version of this article appears in print on May 12, 1987, on Page D00012 of the National edition with the headline: Market Place; London Bullish On Thatcher. Order Reprints|Today's Paper|Subscribe